Hyundai to boost India presence via takeover of GM plant

Hyundai Motor Co., the leading South Korean carmaker, is set to expand its presence in India with a takeover of General Motors Co.’s plant in the world’s second-most populous country.

Hyundai Motor India Ltd. on Monday signed a term sheet for the potential acquisition of General Motors India’s Talegaon Plant in Maharashtra including land and buildings, as well as equipment.

“We inked the deal as it is necessary to increase capacity in the fast-growing Indian market,” said a Hyundai official in Seoul.

Hyundai and its affiliate Kia Corp. were together the No. 2 automaker in India by selling a record 807,067 vehicles last year in the world’s third-largest automobile market after China and the US.

TO RAMP UP INDIA CAPACITY TO 1 MILLION UNITS

Hyundai, which operates a plant in Chennai with an annual production capacity of some 770,000 vehicles, is expected to increase the ability to about 1 million units with the acquisition and more investment, industry sources in Seoul said. The Talegaon Plant owned by GM, which withdrew from India in 2017 due to sluggish sales, had an annual capacity of 130,000 cars.

Several automakers such as India’s Mahindra and China’s Great Wall Motors (GWM) were interested in the plant. GWM signed a deal to buy the factory from GM in 2020 but failed to acquire the plant as the Chinese carmaker could not secure the necessary regulatory approval.

Hyundai could use the Talegaon factory as a manufacturing base for the production of its first India-dedicated electric vehicle, a local media reported.

The company planned to spend 40 billion rupees ($488 million)  on research and development to launch six electric vehicle models in India by 2028, Reuters reported in 2021.

India’s new car sales in India jumped 26% to 4.25 million units last year and are forecast to grow more than 10% this year, above the estimated global market growth rate of 4.8%.

Write to Hyung-Kyu Kim at khk@hankyung.com
 
Jongwoo Cheon edited this article.